1. Get "Pre-Approved" not "Pre-Qualified!"
Do you want to get the best property you can for the least amount of money? Then make sure you are in the strongest negotiating position possible. Price is only one element in the negotiation process (and not necessarily the most important one). Often other terms, such as the strength of the buyer or the length of escrow, are critical to a seller.
In years past, we always recommended that buyers get "pre-qualified" by a lender. This means that you spend a few minutes on the phone with a lender who asks you a few questions. Based on the answers, the lender pronounces you "pre-qualified" and issues a certificate that you can show to a seller. Sellers are aware that such certificates are WORTHLESS, and here's why! None of the information has been verified!
Many times unknown problems can come to the surface! Some of the problems we've seen include recorded judgments, alimony payments due, glitches on the credit report due to any number of reasons both accurately and inaccurately and down payments that have not been in the clients' bank account long enough.
The way to make the strongest offer today is to get "pre-approved." This happens AFTER all information has been checked and verified. You are actually APPROVED for the loan and the only loose end is the appraisal on the property. This process takes anywhere from a few days to a few weeks depending on your situation. It's VERY POWERFUL and a weapon we recommend all our clients have in their negotiation arsenal.
2. Sell Your Property First, Then Buy the House
If you have a property to sell, sell it before selecting another property to buy! Contingency sales aren't nearly as strong as one that comes in with a ready, willing and able buyer. Consider this scenario: You've found the perfect property – now you have to go make an offer to the seller. You want the seller to reduce the price and wait until you sell your own property. The seller figures that this is a risky deal, since he might pass up a buyer who DOESN'T have to sell a property while he's waiting for you. So he says OK, he'll do the contingency but it has to be a full price offer! You have now paid more for the property than you could have because of the contingency, and you have to sell your existing property in a hurry, otherwise you lose the property. So to sell quickly you might take an offer that's lower than if you had more time. The bottom line is that buying before selling might cost you THOUSANDS of dollars.
If you're concerned that there is not a property on the market for you, then go on a window-shopping trip. You can identify possible businesses and locations without falling in love with a specific property. If you feel confident in a decision after that, then put your property on the market.
3. Play the Game of Nines
Before property hunting, make a list of things you want in the new place. Then make a list of the things you don't want. You can use this list as a guide to rate each property that you see. The one with the biggest score wins! This helps avoid confusion and keeps things in perspective when you're comparing multiple properties.
When looking at properties, keep in mind the difference between "STYLE” and “SUBSTANCE." The SUBSTANCE cannot be changed such as the location, view, size of lot, noise in the area, and floor plan. The STYLE represents easily changed surface finishes like carpet, wallpaper, color, and window coverings. Buy the place with good SUBSTANCE, because the STYLE can always be changed to match your tastes.
4. Don't Be Pushed Into Any Property
Your agent should show you everything available that meets your requirements. Don't make a decision on a property until you feel that you've seen enough to pick the best one.
5. Stop Calling Ads!
Please note – ads are sometimes created to make the phone ring! Many of the properties have some drawback that's not mentioned in the ad, such as traffic noise, power lines, or litigation in the community. What's not mentioned in the ad is usually more important than what is highlighted.
For this reason, we want you to be very careful when reading ads. Remember that the person writing the ad is representing the seller and not you! The most important thing you can do is have someone on your side looking out for your best interests. Your own agent will critique the property with an eye towards how well it meets your needs and will point out any drawbacks you should know about. Pick an agent you feel comfortable with and enlist the services of that agent as a buyer's broker. Then you become a client with all the rights, benefits, and privileges created by this agency relationship, and you're no longer just a shopper.
Did you know that some businesses are sold WITHOUT A SIGN ever going up or an AD EVER BEING PUT IN THE PAPER? These "great deals" go to those people who are committed to working with one agent. When an agent hears of a great buy, who do you think gets a call? A client the agent is legally obligated to represent, or someone who just called on the phone and said "keep your eyes open?" So to get the best buy on a property, we always recommend that you hire and stick with your own agent.
